Does Cadet Pilot Program Make sense ?

Does Cadet Pilot Program Make sense ?

Cadet Pilot Program 

Cadet Pilot Program was started with the intent of maintaining a smooth flow of pilots in a rapidly expanding airline. On the one hand it made sure that the airline expansion continued in a planned manner and on the other it provided job security to the candidates. The concept of providing job security is questionable and contradictory in an expanding business environment. So, lets try to analyse it purely from a financial point of view. 

Time Value of money 

Many a times we make the mistake of not considering the time value of money but only considering the amount we are paying. This becomes a significant factor in a cadet program since huge lum-sum amounts are charged by the Airline. The below analysis is based on the pricing published by one of the Airlines in its cheapest Cadet Program where the total cost is projected under Rs 90 Lac. So, we will take for example that a person joins this cadet program in Jun 2019. Since the Program is for 2 years approx (104 weeks), this person will start earning salary in Sep 2021. Therefore, we can take 2021 as the base year for comparing the returns on the investment. We will compare the future value of the investments made by the candidate from 2019 -2021 and value of the salary earned by him in the next 7 years which is the contract period. 

Future Value of Investment made Today

Time
Payment Made
Value of this investment in Jun 2021 (at 8% nominal interest, , 70 INR = 1 US$ and approximate figure for period cycle)
  Jun 2019 (1st Installment)
4,50,000
5,24,000
Sep 2019 (2nd Installment)
61,44,000
1,25,00000
Jan 2021 (3rd Installment)
4,01,150
4,02,150
Mar 2021 (4th Installment)
19,95,000
20,00,000
Total Value of money Spent
89.9 Lakh
1.57 Crore Rupees

Present Value of Future Salaries earned based on Benchmark Figures ( Take home after Tax deduction)


Year 
Salary Earned
Value in 2021 (at 8% nominal interest)
2021
780000
780000
2022
1560000
14,40000
2023
1800000
15,45000
2024
1800000
14,30000
2025
3600000
26,50000
2026
3600000
24,50000
2027
5400000
34,30000
Total Value of money earned

1.38 Crore Rupees

Total Loss to the Candidate is Rs 20 Lakh provide everything goes smooth with no complications in training, medical etc..
So over a period of 9 years a candidate has made a net loss of 20 lakh rupees. If i had this money in 2019 i would rather invest it wisely and in 9 years i could buy a plane & probably hire a pilot as well 

What factors are missing in the calculations ?

This does not consider the risks such as medical unfitness, inability to pass tests etc. Can we calculate it differently ? Yes you can calculate future value of you earning and make the comparison at the end of 9 years. The result would be even more disastrous for the Cadet Program. So, this calculation is the best possible in favour of cadet program. Yes, you could become a Captain early by an year then that would reduce the loss little bit, but here we are talking about a financial decision based on generic numbers. In that context, financially the Cadet Program makes no sense. But yes, there are factors other than finance or else Ferrari won't be there in the market ! Choice is always yours.  


Learn More in Our Webinars



    • Related Articles

    • Five Steps to Crack Pilot Exams Faster

      Five Steps to Crack Pilot exams Why Faster ? The simple reason is ‘Later’ eats on both mind and money. If you are aspiring for a CPL and want to clear your exams before your start your flying , the later you clear your exams you are only delaying the ...

    • Becoming a Pilot in India

      Becoming a Pilot in India Many dream of becoming a pilot. So here is the way forward. It is a requirement based process. Think about getting a driving license. There are certain requirements to be fulfilled like you should first get a learners ...

    • Self Paced Program

      Self Paced Program How Self Paced Program Works Recommended For  - You have already been studying but unable to clear exams by a small margin or - You need to clear Composite CPL Inclusions - Interactive Books with Video Lectures and topic wise ...

    • CPL Instructor Led Program

      Instructor Led Courses Program Details Live Classes  Subject Live Classes Workshops Individual Review Total Hours Duration Navigation 80 30 15 125 3 Months Meteorology 60 20 10 90 3 Months Air Regulations 40 20 10 70 3 Months Technical General 90 20 ...

    • PPL : Instructor Led Program

      Program Details for PPL Live Classes  Subject Live Classes Workshops Individual Review Total Hours Duration Navigation 80 30 3 113 3 Months Meteorology 60 20 3 83 3 Months Air Regulations 40 20 3 63 3 Months Technical General 90 20 3 113 3 Months ...